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Level 3
posted Apr 14, 2019 3:49:00 PM

How does rental property depreciation calculate?

I noticed the depreciation amount is less than (Cost base - cost of land)/27.5. Why?

 

0 3 1219
2 Best answers
Level 15
Apr 14, 2019 4:07:24 PM

MM = the property is placed in service at the midpoint of the month; 1/2 month of depreciation is allowed for the month of January.

 

See https://www.irs.gov/publications/p946#en_US_2018_publink1000107539

Level 15
Apr 14, 2019 5:20:25 PM

You have to use straight line and mid-month for residential rental property.

 

See https://www.irs.gov/publications/p527#en_US_2018_publink1000219089

3 Replies
Level 15
Apr 14, 2019 4:07:24 PM

MM = the property is placed in service at the midpoint of the month; 1/2 month of depreciation is allowed for the month of January.

 

See https://www.irs.gov/publications/p946#en_US_2018_publink1000107539

Level 3
Apr 14, 2019 4:39:20 PM

Thanks! I am curious. TurboTax does not give me a choice to select mid-month or first-month conversion, and I did enter this property is converted from primary residence to rental on 1/1/2018. Wondering why it just chose MM conversion for me

Level 15
Apr 14, 2019 5:20:25 PM

You have to use straight line and mid-month for residential rental property.

 

See https://www.irs.gov/publications/p527#en_US_2018_publink1000219089